Video: Overspending

By NBC News Investigative Unit
updated 11/15/2007 9:16:10 PM ET 2007-11-16T02:16:10

For six months, security guard Mary Guidroz -- whose apartment was destroyed by Hurricane Katrina -- lived with a friend in a FEMA trailer on a site at the Port Bienville Industrial Park in Bay St. Louis, Miss.

A new report by government watchdogs obtained by NBC News estimates expenses for each FEMA trailer at the Port Bienville site could reach a staggering $229,000.
 
"I could have bought a brand-new trailer! Or a house even!" Guidroz says.

She's right. Guidroz could have bought a $200,000, 3-bedroom house nearby, with money left over.

Investigators with the Government Accountability Office (GAO) say the trailers themselves cost only $14,000, but FEMA wasted big money by placing them at a small temporary site built from scratch with huge maintenance costs.

"What you see throughout this report is an utter disregard for how much was being paid," says Senator Susan Collins (R-Maine) who asked the GAO to investigate trailer-maintenance costs.

The GAO found that over a seven month period, FEMA made a total of $30 million in improper or fraudulent payments for trailer maintenance alone. The investigators also found examples of phony inspections, rigged bids, and excessive payments.

At one site, McLeod Water Park in Kiln, Miss., FEMA paid a contractor $1.8 million to clean trailer septic tanks. A staggering $1.5 million of that was profit.  While FEMA paid the contractor $245 per cleaning, per trailer, three times each week, the contractor paid a subcontractor $45 per cleaning to actually do the work.

The contractor told government investigators that it informed FEMA about the big profit, and that FEMA said it didn't care.

David Stewart, a debris cleanup worker who has been living at that site, says now he understands why workers cleaned out the tanks so often.

"Half the time, they didn't even need cleaning out," Stewart says. The company was paid for each visit.

"It's obnoxious. The waste," Stewart says.  "It's not right.  it's just not right."

Meanwhile, a small grassroots housing organization in the area could have used that money to build permanent houses for Katrina victims for about $30,000 a house.

"FEMA's practices don't seem to be based much on common sense," says Mike Sweeney, co-founder of Camp Coastal Outpost, a non-profit organization.  Sweeney says his organization has built 144 houses at that price in Louisiana and Mississippi.

FEMA challenged the $229,000 figure for the trailers, saying that number is exaggerated. A spokesman also says the agency was operating under extreme conditions in the wake of the storm, but that now contracts are "fully competitive" and "highly scrutinized."

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